The ZAR strengthened to 15.7600 on the back of a 50 basis point rate hike by the SARB.
- The Rand strengthened after the SARB MPC hiked 50 bps to increase the repo rate to 4.75% and in turn adjusting the prime rate to 8.25%.
- The hike was followed by hawkish comments from the SARB governor, confirming its commitment to fighting inflation.
- The SA CPI YOY rate at 5.8% remains close to the upper end of the 3-6% range.
- This is the fourth consecutive hike and the biggest in over six years due to heightened inflation risks stemming from the war in Ukraine.
- Policymakers said that the overall risks to the medium-term growth outlook are assessed to be balanced, while the risks to the inflation outlook are assessed to the upside.
- The data calendar today has nothing significant that could be regarded as market moving.
- However next week we have the FOMC minutes on Wednesday as well as SA PPI on Thursday.
- The market continues to trade with a sensitivity to global inflationary pressures and the approach the central bank monetary policy.
- Today : Expect some consolidation with a bias for a stronger ZAR as the sell-off in global risk assets appeared to have stalled.
- Markets recovering in New York, coupled with a hawkish FED, allowing for the potential for more ZAR gains.
- USDZAR : Expect a range 15.6700-15.9900
- Importers 15.7800-15.6700
- Exporters 15.8900-15.9900
- EURZAR : Expect a range of 16.6300-16.8700
- Importers 16.7100-16.6300
- Exporters 16.8000-16.8700
- GBPZAR : Expect a range of 19.6500-19.9200
- Importers 19.7000-16.6500
- Exporters 19.8100-19.9200
- USDZAR 15.8400
- EURZAR 16.7600
- GBPZAR 19.7700
- President Cyril Ramaphosa has instructed Arts and Culture Minister Nathi Mthethwa to cancel the contentious R22 million flag project.
- CR said that Mthethwa phoned him to seek counsel amid the backlash over the initiative which many South Africans rejected.
- CR told delegates at the Black Business Council summit on Thursday night that he decided that the initiative must be scrapped. EWN
- Former health minister Zweli Mkhize’s name has surfaced in a Special Investigating Unit (SIU) investigation probing how a KwaZulu-Natal provincial treasury tender ballooned from R3.5 million to R114 million.
- News24 can reveal that an SIU investigation, completed last February, found that a contract issued by the provincial treasury in September 2007 was irregular.
- Mkhize was MEC for finance and economic development at the time. Source : News24
- US stock futures rose on Friday after the S&P 500 threatened to tumble into bear market territory.
- Dow futures edged up 0.4%, S&P 500 futures gained 0.5% and Nasdaq 100 futures jumped 0.75%.
- In regular trading on Thursday, the S&P 500 also declined 0.58% and is now more than 19% below an intraday all-time high reached in early January, within a hair’s breadth of entering a bear market.
- Stocks have come under pressure this week as investors continued to assess the likelihood that the Federal Reserve’s aggressive tightening plans to curb inflation would tip the economy into a recession.
- Bonds yields traded lower this week as the reality of a possible global recession loomed.
- The prices of government debt has increased this week as yields fell as investors rushed into safe-haven assets with fears that central banks could tip major economies into a recession.
- The yield on the 10-year US Treasury note, which sets the tone for corporate and household borrowing costs worldwide, eased to a four-week low of around 2.8%.
- Meantime, Germany’s 10-year Bund yield, the benchmark for Europe, bottomed below 1%. source: U.S. Department of the Treasury
- The Dow lost 236 to 31,253
- The SP500 lost 22 to 3,900
- The Nasdaq fell 29 to 11,388
- image : Trading economics
- Asian markets all higher on the back of a rebound in Wallstreet stocks.
- The Nikkei 225 Index rose 1.27% to close at 26,739, recouping some losses from the previous session, as investors scooped up beaten-down shares following a US-led global equity rout.
- Investors also watched for market reaction after data showed Japan’s core inflation rose above the central bank’s 2% target and hit a more than seven-year high in April,.
- Higher energy and commodity costs are causing broader price hikes that are pressuring households.
- Technology stocks led the advance, with strong gains from SoftBank Group (3.5%).
- In Australia, the ASX 200 Index rose 1.15% to close at 7,146 on Friday, recouping some losses from the previous session, with technology and mining stocks leading the gains.
- Australian technology firms rebounded as investors bought up beaten-down shares, with strong gains from Xero
- Crude WTI crude traded to $111/bl on Friday and were set to end the week little changed.
- Traders focussing on demand recovery in China as well as a looming EU ban on Russian oil against fears about a global economic slowdown.
- Oil demand is expected to rebound in China as authorities in Shanghai lifted some Covid curbs and gave residents freedom to go out to shop for groceries for the first time in nearly two months.
- The EU also proposed this month a total ban on oil imports from Russia, with approval being delayed due to a holdout from some member states. Energy news
- Gold advanced to $1848/oz as continued softness in US economic data amid the Federal Reserve’s aggressive monetary tightening fuelled growth concerns.
- The Fed has raised its benchmark policy rate by an aggregate of 75 basis points this year.
- It is on track to increase it again in 50-basis point increments at each of the next two meetings in June and July.
- Fears of a US economic slowdown dragged the US dollar and US Treasury yields lower, benefitting the safe-haven gold. Kitco metals
- The US dollar traded lower on the back of a risk asset recovery and a fall in treasury yields.
- The index held its recent decline to below 103 on Friday and was set to end a 6-week winning streak, as it tracked the slide in Treasury yields.
- Fed Chair Jerome Powell also stated that they intended using its tools to bring down multi-decade high inflation even if it involves moving past broadly understood neutral levels, raising the risk of a recession.
- This prompted investors to rush for the safety of Treasury bonds, pushing yields and the dollar lower. FX News
- GBPUSD : Traders are lining up to short the British pound with a possible recession on the horizon.
- Inflation came in at an annual 9% in April, a 40-year high, as food and energy prices continued to spiral.
- Bank of England Governor Andrew Bailey has warned of an “apocalyptic” outlook for consumers as a recent survey also showed that a quarter of Britons have resorted to skipping meals. CNBC
COVID-19 SOURCE https://www.worldometers.info/coronavirus/
Cases / Deaths / Recoveries
- Bitcoin US Dollar traded at 29,924.6 this Friday May 20th, decreasing 271.7 or 0.90 percent since the previous trading session.
- Looking back, over the last four weeks, Bitcoin lost 26.39 percent. Over the last 12 months, its price fell by 19.84 percent. Crypto news
- WORLD 526,021,445 / 6,297,217 / 495,794,677
- USA 84,799,040 / 1,028,337 / 81,491,282
- SA 3,915,258 /100,898 / 3,733,569